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My Social Security is Being Garnished Over an Old SBA Loan. – Carrie

“Dear Steve,

Home and business was damaged during Katrina. got a SBA disaster loan. paid monthly notes. they were 3rd lienholder. 1st lienholder foreclosed on us. he did not notify SBA about the foreclosure. we did and sent names, addresses, phone nos,and documentation of all concerned. he bought the property back at the land sale and resold it within two weeks. he told new owner that he had taken care of the SBA loan, which he had not. i have since been put on SS disability and draw a small check every month.

who is responsible for the SBA loan balance, which was 48,000 and is now is around 60,000 with interest??..the 1st lienholder that forclosed on the property or me?? i asked because SBA has got garnishment against my SS benefits every month for monthly payments. i thought if you were foreclosed against, the one foreclosing was responsible for all liens against said property. please advise me of what is right and wrong. thanks for your time.



Dear Carrie,

Social Security benefits are generally off limits except for debts owed to the federal government.

If the garnishment creates a hardship, you can ask to have the garnishment reduced or stopped.

See my guide How to Easily Stop a Social Security Wage Garnishment.

If the first lien holder is the one that foreclosed then the remaining liens would have been stripped from the property. That however does not remove your obligation to pay the debt.

You might want to consider dealing with this debt and any other you might have by considering bankruptcy. The bankruptcy would terminate the SBA in its entirety.

You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.

Please post your responses and follow-up messages to me on this in the comments section below.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Carrie

    Thanks, Steve for your response. I finally got an answer to my question that no one else seemed to have an answer for. Grateful to you for taking the time to respond. Thanks again.

  • DRH

    Did all of the above, still offsetting for sba disaster loan

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